Mortgage Loan Terms In Northern Virginia

Published by julia | Filed under Buyer / Seller Tips, Real Estate, Shout Outs, Uncategorized

According to Fannie Mae, Florida has been consistently ranked among the Top 10 states for mortgage frauds since the past 7 years. This has called for more transparency in mortgage loan terms in all cities across the state including Fairfax, McLean, Vienna, and Alexandria among others.

The question is - how can the terms of a mortgage be made more transparent? Considering that, most of the borrowers and buyers aren’t fully aware of the terms and conditions on the documents they sign, it seems like implementation can be a problem. Typically, the focus is on rate, payment, and closing costs and once these 3 are accepted, it’s a need to get over with the signing process.

Another fact that is damaging to the implementation is the difficulty in understanding mortgage terms. Recently, a Tampa borrower, I know, took out ARM that is now being adjusted, but not in his favor. He was shocked to see the amount of mortgage he had to pay once the adjustment would be made. He asked me what he could now next. Maybe refinance? He didn’t feel happy about paying pre-payment penalty, simply because he didn’t read the terms and conditions of his mortgage loan document.

According to mortgage loan terms, of you decide to pay off your mortgage within the first 2 years; you are liable to a pre-payment penalty of 6 months of interest. For ex, you pay $6500 as penalty on a $200,000 loan. Usually the lender will have a pre-penalty clause because this guarantees a fixed return on the loan. As a borrower, you get a better interest rate. So, if you want to pay off your loan within the first 2 years of the loan period, ask the lender if a “soft” pre-payment penalty term is available. Soft pre-penalty means that incase you sell your property you wouldn’t have any penalty to pay. But if you refinance, you’d still end up being penalized.

What we are trying to say is that mortgage loan terms in Northern Virginia or anywhere else for that matter, are transparent to the loan borrower. You just need to read and understand them before you sign them.